Foundations and Fundraising and Endowments and Philanthropy

Endowments on rise for small not-for-profits

October 22, 2007

Leaders of small not-for-profits often are so concerned with day-to-day survival that they have little--if any--time to worry about saving for the future.

A growing number of local organizations are bucking that trend, taking a proactive approach to build an endowment its leaders hope will result in more stable, predictable income.

Storytelling Arts of Indiana launched its first-ever endowment campaign Oct. 10, aiming to add $100,000 to its endowment by 2010. Agape Therapeutic Riding Center is planning a similar effort, expected to be unveiled in the next three years. And at least one other central Indiana agency is quietly raising money for a campaign that could go public early next year.

Fund-raising consultant Kris Kindelsperger said it is ambitious for small organizations to build their own endowments.

"Many organizations would love to have an endowment," said Kindelsperger, a senior executive consultant at Greenwood-based Johnson Grossnickle & Associates. "Fewer are able to actually implement a campaign, though."

Typically, endowments are started with a large gift from a generous donor, said Brian Payne, CEO of the Central Indiana Community Foundation, which manages almost 130 endowment funds for local charities--including about two dozen relatively small agencies like Agape and Storytelling Arts.

"Organizations [that] publicly launch a campaign to raise funds for an endowment are not very common," he confirmed.

Indianapolis-based Storytelling Arts launched its campaign to celebrate its 20th birthday this year. The endowment began years ago with a $75 donation from a man who worked on the sound at one of the group's events, and grew to about $30,000 without a formal fund-raising effort.

Endowment earnings generate about $500 a year, which goes into the organization's operating budget of about $200,000. Executive Director Ellen Munds said the money has been used to pay a storyteller or provide tickets to students, for example.

The more value an endowment has, the more money it generates.

"I really want the organization to go on without me," said Munds, who co-founded Storytelling Arts in 1987 with friends Bob Sander and Nancy Barton. "One of the ways to secure the future of Storytelling Arts of Indiana is to start an endowment that will last."

A substantial endowment will help the public see Storytelling Arts as an organization that is here to stay, she said. Kindelsperger agrees.

"Launching a campaign is reflective of strong leadership," he said. "It shows that an organization is thinking about what will happen in the next 20 years."

Cheryl Miller, Agape's executive director and founder, also likes the idea of an endowment campaign.

"Our dream is to have an endowment that is large enough to help us defer costs," she said. "We would love to be able to focus more on programs and spend less time looking for more sources of income."

In order to build on its $35,000 endowment, Cicero-based Agape has begun to plan a campaign similar to Storytelling Arts'. Although the effort is still under wraps, Miller hopes to see a public launch within three years.

"The wisest thing for an organization is to have an endowment because it ensures a set amount of money every year," Miller said.

Officials at another small arts organization in Indianapolis confirmed an endowment campaign is in the works, but declined to comment because it is still in the so-called "silent" phase.

Although successful endowment campaigns would be beneficial for most organizations, they're anything but easy.

Asking donors to give to the Storytelling Arts endowment campaign in addition to its annual operating fund drive may stretch supporters, Munds admitted. To lessen the burden, Storytelling Arts will take pledges during the first year of its campaign and allow up to three years for donors to pay them off.

Organization leaders should carefully consider why they want to pursue an endowment before actually launching a full-fledged campaign, advised Timothy Seiler, director of The Fund Raising School at Indiana University's Center on Philanthropy.

"Organizations shouldn't expect that an endowment will solve fund-raising woes," he cautioned. "If the organization is struggling already, then an endowment campaign probably isn't the best answer."

Storytelling Arts evaluated potential problems before launching the campaign. Early in the process, it created a board dedicated solely to the campaign.

That eight-member board is working with the full Storytelling Arts board to reach their goals.

"It's not going to be easy," Munds said. "We're going to have to work really hard on this if we want to accomplish our goal."

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